With reference to Central Bank digital currencies, consider the following statements : 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. A digital currency can be distributed with condition programmed into it such as a time-frame for spending it. Which of the statements given above is/are correct?
Correct Answer: Option C
Central Bank Digital Currencies (CBDCs) offer an alternative to traditional payment systems like SWIFT and reliance on currencies like the US Dollar.
Statement 1 is correct: Countries can engage in direct, bilateral exchanges of digital currencies, bypassing SWIFT or similar settlement systems. This reduces the need for a dominant global reserve currency.
Statement 2 is correct: CBDCs can be programmed with conditions, such as a time limit for spending or restrictions on where the funds can be used. This enables targeted fiscal transfers and subsidies.
Therefore, both statements are correct.